Thursday, January 25, 2007

I must confess that I am torn on the issue of a universal health care, or access to cheap medical care.

The main question that I have rests on the fact that many health problems are caused by lifestyle choices. Alcohol, tobacco, drug use, over eating, lack of exercise, unsafe sex, dangerous hobbies or professions (such as football player), are some of the lifestyle choices that put people in need of medical care.

My question is, why should I have to pay for somebody else’s choices?

I do not want to outlaw these options. I am very much in favor of allowing people to live the types of lives in which they find the most value . . . as long as they do not harm other people. The problem with universal health care is that they turn private lifestyle choices into choices that harm other people – by forcing others to cough up the money to cover the medical bills.

Who Pays?

With universal health care, the claim that “I am not hurting anybody else” becomes a lie whenever that person does something that puts his health at risk. If you plan on sending me the bill to pay for the consequences of those actions, then your actions affect me. They harm me – in the same way an embezzler who breaks into my bank account and siphons money harms me. I will almost certainly have other things that I will want to do with that money.

The situation is much like the one I described in an earlier post on China’s anti-satellite test. That was another instance where a right to do what one pleases crossed a moral line by violating the principle, “As long as you do not harm others.”

I compared that situation to one in which a person walks into a restaurant and orders a meal. When it comes time to pay, he uses a debit card that takes the money from somebody else’s account. We can assume that the card is random – that it just takes the money out of some random account somewhere.

Because he is not buying his own meal, it is reasonable to expect that he will eat out more often, in more expensive places, and order far more than he needs, simply because he does not suffer the cost of his overindulgences. If, instead, he were forced to pay for his meals out of his own pocket, he would spend the money more wisely.

By comparison, those with unhealthy or dangerous lifestyles are also making choices that they might not have made if they were forced to suffer all of the costs of their actions, and were not permitted to charge those costs off of somebody else’s (anybody else’s) account.

By creating this subsidy for unhealthy and dangerous choices, this policy would make the world worse than it would have otherwise been. The man who can buy whatever food he wants and charge it to some random account is quite often not going to get as much fulfillment from the meal as the person would have gotten from the money taken to pay for the meal. The victim is made worse off to a greater degree than the culprit is made better off.

One might want to argue that, in the case of universal health care, the cost of the care is irrelevant. The poor health effects alone would be enough of a disincentive to keep people from performing these types of actions to the degree that it was possible to dissuade them. If somebody does not care about their health, then they are certainly not going to care about the costs.

I deny that this is true. People always act to fulfill the more and the stronger of their desires, given their beliefs. Having each person pay their own medical expenses adds additional desire-thwarting potential to these lifestyle choices. As a result, there will be some measure of reduced demand for these options. The amount of reduction is open to question, but the fact of reduction seems quite likely.

More importantly, the fact that the agent does not care about the financial cost of his choices still does not give him the right to send me the bill. A person who wants an indoor swimming pool who is willing to pay any cost does not gain from his keen desire the right to send me the bill for its construction.

If I am going to be given the bill to pay for these types of choices, then I reserve the right to have a voice in what they choose - a right to veto the most expensive (to me) options. If the costs come out of their own bank account, then its their money and I have no say in the matter. If the costs come out of my bank account, then I have a right to a say in the matter.

A Possible Solution – Supplemental Insurance

One option for dealing with these types of cases is to require that people purchase (if they can afford it) separate insurance to handle the expenses of lifestyle choices. There will still be people who will not be able to afford this insurance. However, the choice for them is to not engage in lifestyle choices that they cannot afford. These people should not drink, smoke, overeat, or engage in risky past-times unless they can afford to cover the potential medical expenses that may come from these options.

This is not an ideal solution. It would be difficult to determine which illnesses are caused by lifestyle choices. Furthermore, we would have to suspect that many doctors would be guilty of corruption and fraud if, by classifying an illness as non-lifestyle, they can get medical care for patients who would otherwise not be able to afford it. Furthermore, we will still have to deal with those who make poor lifestyle choices without the means to pay for them. What do we do with these? Let them die in the street?

This is not a knock-down argument. If we only permitted ideal solutions then we would never permit anything. Even with these problems, it is possible that the potential benefit is greater than any other alternative (which has even greater problems). We can do nothing but go with the best option available.

A Possible Solution – Tax Risky Options

Another possible solution is to put a tax on those goods and services that tend to result in increased health risks. This includes alcohol, tobacco, candy, junk food, fast food, gasoline (because people drive too much), businesses that involve increased customer risk such as skiing, and businesses that have risky jobs (as an incentive to find safer options).

It is hard to find something to tax that is related to all forms of risky activity. For example, I cannot think of a tax that could be levied to provide a disincentive to engage in unsafe sex. Yet, the fact that it is difficult to provide an examples in all cases does not argue against using the health care tax where contributors to higher health care needs can be identified.

That tax would have two effects. One is that it will raise revenue to help pay the costs of universal health care. The other is that it will lower the demand for these lifestyle choices, resulting in a healthier population, which will lower the demand for health care services.

Nothing in this prevents somebody from buying an occasional hamburger or pizza. However, the more one buys into a risky lifestyle, the more money they pay. This is only fair. The more one buys into a risky lifestyle, the more likely it will become that the agent would have need for those medical services he has already paid for.

Of course, the rich will be able to afford more options than the poor. However, this is nothing new. Everywhere, rich people can afford to live in a way that those who are not so rich cannot afford.

Punishment

If there were ever a national debate on such a policy, I would expect those who engage in these lifestyles to complain that they are being punished for their lifestyle choices – and nobody has the right to condemn and punish the private choices of another.

These people would be missing the point. This argument would be like saying that, after you stole my credit card, that my act of calling the credit card company and canceling the card would be an act of ‘punishment’ that I had no right to inflict on you.

In this case, I hasten to remind you, you are using my credit card and drawing money on my account. I am not punishing you by denying you access to my bank account. It’s my money, and you have no right to it.

Similarly, these taxes are not punishment. They are simply ways of collecting money to pay for the medical care that one’s lifestyle choices will likely create. It is more fair than forcing others, who have kept themselves healthy, to pay for the health care costs of those who have not taken care of themselves.

Lobbying

I do not expect that these points will actually make it into practice. Those who market fast food, candy, tobacco, alcohol, and other goods and services that increase health risks will lobby against such a provision - and they have more money than I do.

Yet, their arguments will be morally bankrupt, regardless of whether they are politically successful. For decades, the political power of the Southern states were sufficient to protect the institution of slavery. After the civil war, they were able to establish and maintain a set of Jim Crowe laws and a standard of “separate but equal” that was certainly separate and nowhere near to equal. However, political power does not translate into moral virtue.

For all practical purposes, the subsidies that universal health care will provide to capitalists involved in promoting unhealthy choices is one that allows wealthy businessmen to line their pockets with hundreds of millions of dollars by doing hundreds of billions of dollars of damage to others. They destroy far more than they create, and even far more than they take. They make the world worse off and, in the process, redistribute wealth and (more importantly) well-being away from those who can least afford it and to those who least need it.

Political success does not prevent this description from being accurate.

Perhaps there is a chance, however small, that the leaders of some of these companies can grow enough conscience to say, “I would not like having other people charging meals off of my bank account without my consent; I should not be taken money out of other people’s account – particularly to subsidize an industry of making people fat and sickly.”

I have some of the same concerns about universal health coverage. On the other hand, I think that any system that pools risk will have similar problems, though to a lesser degree. For instance, low-deductible, low co-pay insurance policies give people too little incentive to avoid expensive treatments and tests.

Our present system, I understand, incurs something like 15-20% overhead for administrative expenses related to figuring out who pays how much for what services. It is also my understanding that the overhead associated with single payer systems is much lower. If that is the case, does that not at least mitigate some of the disadvantages?

Finally, this is not new territory. Universal health care coverage is the prevalent system in developed countries, and they spend a smaller percentage of their GNP's on health care and have generally healthier populations. While it may not be the case that universal health care is uniquely responsible for these facts, it is enough to suggest to me that the consequences we fear from universal health care coverage are not so likely as we might expect.

My tentative position is that we should provide universal health care coverage and to work on the potential behavioral problems you describe using the tools of education, praise and condemnation, and probably still some kind of financial incentives.

I think there is a whole class of behaviour that, while causing some small harm to everybody else, are nonetheless acceptable because if they weren't acceptable the loss of freedom would be even worse.

For example, if I buy a bigger car, then my potential for injuring other people who I may collide with will increase. (I don't buy any arguments based on the economic consequences of my buying a car - I would just buy something else with the difference anyway.)

It seems to me that mildly health-threatening lifestyle choices within a system of universal healthcare also fall into this category. Yes, there is a moral hazard, but it is worth the tradeoff against the benefits of universal healthcare.

Externalities should be assigned to the degree that it is efficient to do so. As Joe Otten states in his comment, it does not make sense to go through $1000 of expense to assign $100 in externalities. Nor does it make sense to forego $500 in benefit because we cannot efficiently assign $100 in externalities.

The moral case, does not change simply because we cannot find an efficient legal/political solution. We can still make the moral case for promoting an aversion to actions that have negative externalities, by condemning those who engage in such acts, and praising those who refrain.

Of course, abandoning the idea of universal health care is one possible way of avoiding its subsidy of unhealthy lifestyles. This solution also has its problems. Namely, differences in wealth allow rich people to bid resources for low-value uses away from poor people who have a higher-value use for the resource but who cannot afford to bid.

In this case, I think we can assign some of the costs for those externalities using the methods that I discussed - particularly the second (an 'unhealthy lifestyle tax') to help pay for universal health care and reduce the demands placed upon it.

The problem with a private healthcare market, for which the USA is the exemplar, is that it is an inefficient market, even when focusing only on those who can afford to pay the insurance premiums (directly or via their job) or the fees directly. The evidence for this is the high cost of such healthcare for equivalent treatments compared to just about everywhere else on the planet (after factoring in Purchasing Power Parity or not). There are a number of economic reasons for this but what is relevant here is there are three types of solutions externality costs, government management/takeover of the market and government modification of the market to make it efficient. You discuss only the first two of these here.

With regard to externality costs to make an inefficient market efficient, your arguments there are theoretically quite correct, certainly based on moral harm, even if there are a number of reasons why they are impractical in general, although not necessarily in specific, circumstances.

The government solution, stereotypical in Europe, does lead to on average lower treatment costs than in the USA, even allowing for higher externality costs that already exist in Europe (especially in the UK, regardless of how this tax revenue is allocated). There are nonetheless many problems with it in terms of obtaining required treatment, regardless of lifestyle choices, due to (non-desire) utilitarian calculations for allocation of limited funds, leading to unequal availability of resources based on age, location, type of condition, treatment response times and other factors.

The third solution (for which the exemplar) is the Singaporean Healthcare model. The average treatment costs are both lower than either the typical private and government healthcare models and objectively it has one of the highest levels national health when population health is normalised based on health costs. This is a mixed model, fixing the flaws inefficient private and government healthcare markets internally rather than externally, to achieve (near)efficiency. The key element is that all citizens pay a proportion of their income into an account that only they (and under some conditions their family members) can access and only for specific healthcare treatments. They have the option of different levels of privacy (for which they pay more) and all are entitled to treatment. Services are offered by a mixture of public nd private services. All also must pay for critical illness insurance to deal which covers exceptional illness regardless of life style choices. There is a fund for the unemployed to guarantee a minimum level for everyone.

As a result when anyone wants any treatment they are taking it out of their own account and they do not experience the inequalities noted above with respect to traditional government healthcare systems. In addition these are incentives to limit their lifestyle choices as it is they who will be primarily paying for them - this is the internal equivalent to externality costs (which might exist in Singapore too I do not know). Now this solution is being considered for the majority of Asian countries.

No my view here was specifically motivated by the problems in the UK with the NHS. I asked the simple question that we have multiple parallel experiments running around the world, so lets look at them and find a metric to compare them (surely this is the job of the civil service you or I might ask, but apparently not!). This is how I discovered that Singapore has better mortality rates and other health statistics relative to per capita health costs EC, Canada, Australia and the USA - my survey was not exhaustive and in investigating why I discovered some significant difference to the NHS and USA healthcare systems, that I reported briefly here.

I am an empiricist and I have not thought yet about welfare and income redistribution yet but I would apply the same approach, say, looking at the costs, measures of societal health (crime statistics etc.), economic success and growth and then see what seems to work the best and try to understand why.

About Me

When I was in high school, I decided that I wanted to leave the world better off than it would have been if I had not existed. This started a quest, through 12 years of college and on to today, to try to discover what a "better" world consists of. I have written a book describing that journey that you can find on my website. In this blog, I will keep track of the issues I have confronted since then.